Your pop quiz for today: Define “art.”

Wait, you don’t need to panic here. You don’t need to go fumbling in the deep recesses of your mind for some wisdom about “beauty” or “imagination” or “form.” You just need to repeat after Michael Plummer and Jeff Rabin, the two principals behind the midtown Manhattan-based Artvest Partners LLC.

“Art,” their maxim goes, “is an asset class.”

ArtVest Partners, the trendy financial firm Plummer and Rabin run, helps wealthy people invest in works of fine art. The firm is doing a bang-up business.

Luxurious art houses like Sotheby's are booming despite the recession. Photo by Chris Beckett.

Luxurious art houses like Sotheby’s are booming despite the recession. Photo by Chris Beckett.

America’s wealthy — and deep pockets everywhere else for that matter — have been pouring epic sums into artwork. Christie’s and Sotheby’s, the two big fine art auction houses, are reporting a 35 percent gain in the prices paid for Gainsboroughs, Picassos, and other blue-chippers over the past 12 months.

The Artprice Global Index, a broader tally of the prices works of fine art are fetching, has art values up 120 percent over the last decade.

Why the surge? Higher prices reflect no greater appreciation — on the part of the wealthy — for the aesthetically pleasing. They do reflect a greater appreciation of art, within high-income circles, as a high-return investment. And bankers are appreciating, too. Financial institutions are making art-based loans. They’re letting mega millionaires use their artwork as collateral for business deals.

“We now can start talking,” an arm of Deloitte, the global consultancy firm, reported last month, “about the early stages of an Art and Finance industry.”

The continuing Great Recession in regular, old-fashioned industry, analysts at ArtInfo explained last week, is helping this new art-and-finance combo along.

“International high-net-worth individuals,” the analysts point out, “are looking for somewhere to put their money besides the anemic stock market.”

But the art world hasn’t been the only “asset class” to benefit from this yearning for larger and safer returns. Dollars and euros and pounds are also flowing to other “hard” assets that share all the attractions that fine art offers. Silver, wine, and gold have all been ratcheting up steadily over recent years.

This past September, Investment Week’s Joe Roseman gave all these hot asset classes a memorable new handle.

“Everyone,” Roseman advised his well-heeled readers, “needs some SWAG.”

The elements of SWAG — silver, wine, art, and gold — have “all appreciated quite sharply” over the past decade, notes Roseman, despite “two global recessions, a severe global banking crisis, a credit crunch, and (generally speaking) highly volatile and mostly negative equity market performance.”

signupFine wines, the Liv-Ex wine index shows, have jumped about 300 percent since 2000. Gold has appreciated at an even higher rate, as has silver.

The Standard & Poor’s 500 stock index, by contrast, rose just 0.04 percent in 2011, returning only 2.1 percent with stock dividends included.

The SWAG elements have plenty in common. Silver, wine, art, and gold all rate as scarce, transportable, long-lasting physical assets. They also make for wonderful tax shelters. They throw off no income stream and, consequently, create no annual tax liability for wealthy investors.

The profits SWAG assets generate at sale, meanwhile, count as capital gains and receive preferential tax treatment over ordinary income.

These tax benefits from SWAG ought to create obvious concerns for those of us in America’s 99 percent. The less the nation’s wealthy pay in taxes, after all, the greater the tax burden on everyone else.

But our cause for concern ought to go deeper than the tax games the swaggering rich can play with SWAG assets. SWAG just may symbolize the ultimate folly — and sheer irrationality — of our staggeringly unequal, top-heavy economy.

In today’s troubled economic times, we desperately need investments in products and services that translate into jobs and paychecks. We need dollars for renewing our society. We need dollars for everything from replacing crumbling infrastructure to developing sustainable new energy technologies.

The last thing we need? We don’t need billions of valuable dollars sunk into SWAG that hangs on the walls of manses or ages in high-tech wine cellars or sits in locked safes. But in a deeply unequal United States, where wealth remains concentrated in a precious few pockets, that’s exactly what we have.

Many of those dollars pouring into SWAG today would have gone yesterday to Uncle Sam. In the middle decades of the 20th century, America’s wealthiest faced income tax rates that reached up over 90 percent on income over $400,000.

In that high-tax-on-high-income environment, wealthy Americans routinely plowed their wealth into tax-free municipal bonds. In the 1950s, for instance, the widow of automaker Horace Dodge invested her entire $56 million legacy from the Dodge auto fortune in municipals.

Those municipals didn’t help Anna Dodge much. They paid only 3 percent in interest. But the dollars invested in municipals paid off handsomely for the mid-century 99 percent. Those dollars financed the schools and sewage plants and waterworks that created the foundation for the classic American middle class.

Those mid-20th century days did, to be sure, hold certain charms for America’s deepest pockets. They could pick up works of art for a song. In 1960, banker David Rockefeller only had to shell out $10,000 for painter Mark Rothko’s White Center. In today’s SWAG world, White Center now carries a $72 million price-tag.

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